Article first published as The Virtual Transformation on Technorati
In August 1995, Microsoft launched Windows 95 in an attempt to capture their founder's audacious dream of having a computer running Windows on every desktop in the world. But in a world with an insatiable appetite for communication the vision statements have dramatically changed. Everyone is leaving their desktops behind and moving into the cloud and soon reaching for the stars. In an increasingly mobile world instant gratification is top order.
Bye bye PCs
Three global behemoths, Apple, Google and Microsoft are locked in a battle for supremacy, and there are the outliers, Amazon and RIM. One a bold maverick and the latter was once a visionary in the enterprise world, now fast disappearing into the background . While Microsoft still maintains a stranglehold on the PC marketshare Google and Apple have gone mobile and flipped the game on Microsoft. Over the last few years PC sales has diminished, as we speak there are more smart mobile devices (smart phones and tablets) sold than PCs. IBM sold their, once priced PC business to the Chinese firm Lenovo. HP is struggling to hive off it's PC business, in an attemptt to move into high value solutions and services. This is a testament to the fact that the era of the PC will soon be behind us. This is made possible through increasingly shrinking chipsets and cloud based services. While device footprint are increasingly portable, we are witnessing convergence, now no one carries an mp3 player, phone, and a camera, they just carry their smart phone instead.
Devices to services
In a fast evolving world and market place nobody has the time to marvel at product spec sheets, everybody is interested in the end service. In other words, what's in it for me? Hardware manufacturers no longer just publish technical specifications, instead feature apps and their services. So what sells now is Nokia's navigation services, Amazon Kindles's books online, iTunes music or YouTube's video channels and the device is merely a means to an end. This is increasingly driving the cost of the hardware down, as seen with the launch of the Kindle Fire. The device that runs the largest app store indirectly delivers the widest range of services. Apple sits pretty on top with 414,852 apps since its launch in 2007, while Google is fast catching up with 237,199 apps in the last 3 years.
Your avatar in a virtual world
Moving away from the physical world is a direct result of this transformative communication age. You no longer need to carry your wallet, just flash your phone to pay your check, Singapore is the third Asian country to adopt NFC for payments in a large scale after Japan and Korea. For many, shops are just viewing galleries, they try out new clothes and swipe the barcode to purchase it cheaper online. Track the delivery status, pay your bills, drop off a check, hail a cab, check-in to a flight everything from your phone. You can literally rule the world from the palm of your hands. Owe your friend money just bump your phones to transfer money. The line between the physical world and the virtual is fast blurring. No more cash or credit cards just a smart guy with a smart card in a smart phone.
Go east, get young and get rich
The new markets are rapidly moving east as the average age of the rest of the world is fast rising and the west is struggling to revive growth. China's median age is 35 and India's around 29, this means more than 25% of the world's population are under the age of 40. The youth in these regions are not going to stand in long queues to do business, they are going to do it online and will want it at a fraction of the cost. These are low cost economies where it's all about volume. India and China alone constitute over 1.6 billion mobile subscribers. Going mobile here reduces cost of services and increases reach to tap into a fast emerging middle class and remote corners where modern services remains remote. India just launched a 35$ tablet, this will expectedly, further kill PC sales in the region and will soon make India one of the largest internet markets. So while western economies are having to deal with an aging population the new markets are young and eager to absorb new technologies.
Competing with Free
Ever since Gillete offered shaving sticks for free while selling razors, we have inadvertently entered the age of free. We are seeing innovative pricing strategies and bundled services offering, banks provide free money transfer and make money off float, TV channels offer free online viewing as against paying cable charges. This is further made possible by the cost of setting up business on the internet coming down, dramatically reducing entry barriers. News channels have to compete with bloggers and the social media where people are experiencing instant news that is fast and free. So companies now have to build innovative strategies to monetize free.
Embrace the change
It is important to embrace this change and adapt to the new strategies. Business relying on online channels for new innovative services, is not another hype like the dotcom bubble, this is a paradigm shift. The shift is to value focused services, innovative pricing strategy with a constant downward pressure on costs, products and services that constantly evolve, supported by a strong technology vision and strategy. In short in the future there will be very few services that rely purely on a physical delivery channels. The industries most affected by this change are Entertainment, Media, Financial Services and Retail.
Invest in the right technologies
When the entire world is gravitating towards mobiles and the cloud, it makes no sense to persist with desktop and other physical services. Companies that are aggressively investing on their internet platforms have to make sure it's tablet ready and backed by mobile services capabilities. This is a significant change to technology roadmaps. Volumes and frequency of hits will increase, driving up traffic, therefore will require the supporting infrastructure, both in terms of availability and capacity. Mobile services operate on different technologies, this will mandate robust services based (SOA) platforms capable of supporting multiple delivery channels or end points that include PCs, tablets and smart phones.
Rapid innovation with shorter product life cycles
A rapidly evolving product and services portfolio is much needed where entry cost with business going online have come down. Innovation in organizations cannot be confined to the R&D teams. Finally being able to convert new bright ideas into reality and doing it quick is the need of the hour. This is not possible unless business is supported with open innovation platforms, agile IT and business processes Product release cycles over the years have consistently reduced from years to months to weeks. Information sharing is simplified outside the enterprise and users are able to easily share rich content and communicate with ease. There is a significant step down when employees step into enterprises that are struggling to catch up. New apps are launched every day in the app stores and it is frustrating to work with a lumbering IT function that takes weeks to even provide a solution. IT and business need to transform themselves into light weight nimble teams that can provide quick turn around times and freely innovate.
Now or never
As the online consumer base grows, the physical paper based services will eventually disappear, further increasing the need for automation, dramatically shrinking turn around times and SLAs ,eventually transforming current business operating parameters. Organizations that struggle to adapt are more likely to fail in this new unforgiving world of business.
While there is a lot of debate on the future technology landscape, some of which is denial, some as a result of the new technologies being transitionary.In my mind the direction is clear, there have been some fundamental changes in the way business is done, the way technology impacts business and there is significant advantage in investing ahead of the curve.
